"In a remarkable way, indices have posted new highs Nifty (5736.80) & Sensex (19198.66), and filled the downward gaps created on wednesday, when circuit filters were on and gave an indication that the worst is over' ......it was a clear 'bear trap' and the bulls were complacent till the sudden collapse of the indices by 6% in the last one hour of trade, where stop losses were triggered, and even margin calls might have accentuated the fall, which was ferocious, and unnerving all players. At the end the indices, have closed below 5DSMA, and even previous week's closing, even on adjusted basis. Reliance results have come after close of hours, which are very good, but absence of any indication of bonus/stock split, which is the demand / expectation from large number of investors, shall be a dampner of the sentiment. TCS bagging multiyear outsourcing deal worth US$1.2 billion initially enthused the investors, and weakening of rupee marginally to 39.70 on account of FII selling, being good news to technology sector and export oriented businesses, there was considerable buying in the first half of trading.
Crude touched US$90 now on supply concerns, and disappointing performance from Bank of America has brought US markets into negative territory for most part of the trading, while Google's stellar performance of 57% raise in profits and FMs address and clarifications to investors at Newyork, in I-Sec meeting yesterday, on the recent steps proposed on "P-Notes' treatment in SEBI's draft guidelines, where suggetions are invited till 20th October' 2007, should throw some more assurance to FIIs that the regulators in India are not banning the investment through P-note route. Nifty futures are steep discount of 32 points to spot even on adjusted basis point to huge unwinding of long positions, and creation of short positions in November series where the discount is 44 points. Inflation data shall be released around 12 noon, results of Wopro, Baja Auto and ICICI bank are due to be announced today.
Our Markets will continue to be volatile till the end of this settlement as large outstanding open interest positions are to be rolled over to the next month series. News flow form SEBI board meeting on 25th, FOMC meeting on 30th and RBI's Credit Policy meeting on 31st etc are important events to influence stock, sector and market movement till 02nd November 2007.
Strategy for the Day: Buy 5000 calls on weakness in the market and 5600 puts on rallies for quick return in day trading.
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